THE ABCs OF CO-OP IMPACT POWER IN PURPOSE

ELECTRIC : A FRAMEWORK FOR MEASURING IMPACT

ABOUT THE ABCs TURNING THE LIGHTS This sector report examines how ownership of ON IN RURAL AMERICA electric utilities infl uences economic activity, community vitality In 1930, a time when most cities and individual well-being based on a seven-factor framework and towns in the U.S. enjoyed electric power, only about 10 developed by the Urban Institute in partnership with NCBA CLUSA percent of rural households and the Cooperative Development Foundation. These factors had electricity. The earliest documented electric co-op are: Access; Business Sustainability; Community Commitment; in the U.S. was established in Granite Falls, Minnesota in Democratic Governance and Empowerment; Equity, Diversity and 1914. By the time the Rural Inclusion; Financial Security and Advancement; and Growth. Electrifi cation Administration was established in 1936, there were about 50 successful electric co-ops nationwide, ABOUT ELECTRIC CO-OPS building confi dence in the model among policymakers.1 Electric cooperatives are not-for-profi t businesses owned By the early 1950s, about 90 percent of rural farms and and controlled by the people who use their services. The households had electricity. two central characteristics of electric cooperatives are: Today, America’s electric cooperatives—represented  Customers—the member-owners—own the business and participate by the National Rural Electric in its fi nancial success through decreased cost of services. Cooperative Association (NRECA)—are engines of  Member-owners have representation on and vote for the board economic growth for more than 42 million Americans, of directors, adhering to the principle of one person, one vote. sustaining 20 million homes, schools and businesses When investor-owned utilities determined that sparsely across 47 states. And NRECA International has been a pioneer populated rural communities would not provide investors the in global rural electrifi cation returns they could achieve elsewhere, local residents and the for more than a half-century, bringing improvements in federal government worked together to build consumer-owned health, education, safety and electric cooperatives that profoundly changed rural communities economic opportunity to communities worldwide. and agricultural production. The story of rural electrifi cation illustrates the transformative potential cooperative enterprise has when coupled with the policy environment that enables co-op development and, ultimately, advances a more inclusive economy.

1775 Eye Street, NW, 8th Floor Washington, DC 20006 1 Lowry, Martin. “A brief history of the global consumer cooperative movement, the cooperative principles, and the successes of U.S. electric cooperatives, NRECA, September 7, 2018; and Tierney, Joseph M. “From Fantasy to Reality: ncbaclusa. | cdf.coop The Impact of Rural Electrifi cation on the Dairy Farms of West-Central Wisconsin, Bachelor of Arts thesis, University of Wisconsin-Eau Claire, May, 2011, p. 28. ELECTRIC CO-OP IMPACT BY THE NUMBERS

ELECTRIC CO-OPS MORE THAN ELECTRIC CO-OPS POWER OVER 900 CONTRIBUTE 20 MILLION ELECTRIC CO-OPS $88.4 BILLION BUSINESSES, HOMES, OWN AND MAINTAIN TO THE U.S. GDP SCHOOLS AND FARMS IN ANNUALLY4 42% 47 OF U.S. ELECTRIC DISTRIBUTION STATES 2 LINES, POWERING 56% OF THE NATION’S LANDMASS3

ELECTRIC CO-OPS ELECTRIC CO-OPS BARC ELECTRIC SUPPORT INVEST 39% COOPERATIVE BOOSTED OF RURAL AMERICA INTERNET SPEEDS FROM 611,600 $12 BILLION LACKS JOBS5 ANNUALLY IN LOCAL SERVICE 3 MG TO 250 MG ECONOMIES6 COMPARED TO 4% AT A FRACTION IN URBAN AREAS7 OF THE COST8

2 “The Economic Impact of America’s Electric Cooperatives,” FTI Consulting, March 2019 3 “Co-op Facts and Figures,” America’s Electric Cooperatives, April 2019 4 “Co-op Facts and Figures,” America’s Electric Cooperatives, April 2019 5 “Co-op Facts and Figures,” America’s Electric Cooperatives, April 2019 6 “Co-op Facts and Figures,” America’s Electric Cooperatives, April 2019 7 Tucker, Russell, Joe Goodenbery and Katherine Loving. “The Digital Divide,” Cooperative Business Journal, Fall 2018, p. 20 8 Lund, Margaret. “Plugged In: Connectivity is Transforming Life—and Learning—in Rural Virginia,” Cooperative Business Journal, Spring 2019, p. 22

THE ABCs OF ELECTRIC CO-OP IMPACT

A CCESS B USINESS SUSTAINABILITY Largely abandoned by investor-owned utilities In the mid-20th century, reliable electric power that were either unwilling or unable to invest in the transformed the operation of family farms. Almost infrastructure needed to bring electricity to farmers a century later, electric co-ops efficiently serve and ranchers, rural Americans formed cooperatives both competitive and hard-to-serve markets. On to meet their need for reliable, affordable electricity average, electric cooperatives serve 8 customers with loans from the federal Rural Electrification per mile, compared to 32 for other utilities. And Administration. By the early 1950s, about 90 percent they are beginning to bring high-speed internet of rural farms and households had electricity.9 access to the 39 percent of rural America ignored by investor-owned firms. 9 Joseph G. Knapp. The Advance of American Cooperative Enterprise, p. 535-542. C OMMUNITY COMMITMENT are more likely to experience persistent poverty. Rural electric co-ops play a leading role in critical Widespread electricity and growing access to areas of community and civic engagement, such broadband, too, has allowed countless rural businesses as renewable energy adoption. America’s newest to thrive, adding new jobs to the rural economy. electric co-op—Kaua’i Island Electric Cooperative— was established in 2002 when a group of local G ROWTH residents and business leaders purchased the utility A 2017 study found that the economic gains of early when its investor-owners threatened to close. At electrifi cation lasted for decades afterward. While the time, electric prices on Kaua’i Island were 73 the direct gain in agricultural productivity happened percent higher than on neighboring Oahu, and over a short period of time, growth in area income, electric generation was almost totally dependent on property values and non-agricultural employment petroleum. In its fi rst 15 years, the co-op has lowered lasted much longer.12 Today, electric co-ops invest $12 costs to within 17 percent of its neighboring island, billion annually in local economies, and the sector and shrunk fossil fuel dependence to just over contributes $88.4 billion to the U.S. GDP annually.13 50 percent, with the rest coming from renewable sources. On a sunny afternoon, 99 percent of the 12 Lewis et al. co-op’s power is generated from solar.10 13 “The Economic Impact of America’s Electric Cooperatives.” FTI Consulting, March 2019. Jointly commissioned by NRECA and NRUCFC.

D EMOCRATIC GOVERNANCE AND EMPOWERMENT Rural electric co-ops are built by and belong to the communities they serve. They are central to their communities and uniquely positioned to encourage democratic participation among their members. The Co-ops Vote initiative by America’s Electric Cooperatives is a non-partisan project designed to inform co-op voters on key issues facing electric co- ops, promote voter registration and encourage them to support their co-ops and the communities they serve when they cast their ballots.

E QUITY, DIVERSITY AND INCLUSION Photo: NRECA With their expertise in infrastructure development Rural electric co-ops own and maintain almost half of America’s electric distribution lines. and deployment, rural electric co-ops are poised— once again—to transform life in rural America by bringing broadband to the estimated 24 million American households that remain disconnected from 21st century economic opportunities.11 Some rural THE ABCs OF ELECTRIC CO-OP IMPACT electric co-ops also off er on-bill fi nancing programs, allowing low-income customers to benefi t from immediate updates in energy effi ciency, along with long-term cost savings and environmental benefi ts.

F INANCIAL SECURITY AND ADVANCEMENT Electric co-ops support more than 611,000 jobs nationwide, off ering a signifi cant source of stable employment—particularly in rural counties that

10 Holly, Derril, “Kaua’i Island Electric Cooperative is making strides in meet Photo: NRECA its renewable energy goals.” NCBA CLUSA blog, February 12, 2019. Co-ops lead the electric utility industry in the development of 11 “At briefi ng on Capitol Hill, policymakers learn challenges and community or shared solar, which is currently off ered by 137 opportunities facing the nation’s 65,000 cooperatives.” NCBA CLUSA blog, December 11, 2019. co-ops across 30 states. CASE STUDY

BARC ELECTRIC COOPERATIVE: INVESTING IN BROADBAND TO TRANSFORM RURAL LIFE

BARC Electric Cooperative General Manager Mike Keyser says the is “in the quality of life business.” The 2,000 members of the rural Shenandoah Valley, Virginia community served by the cooperative got quite a boost when the co-op board voted to add broadband to its services. While large electric and cable companies scoop up lucrative populated areas to provide broadband services, rural areas are often left behind, leaving local businesses without the tools they need to stay competitive Photo: BARC Electric In addition to broadband access, BARC Electric and students without reliable digital access Cooperative is making solar energy effi cient and to information. Federal Communications aff ordable for its member-owners. Commission data indicates that 39 percent of rural Americans do not have access to broadband service, compared to 4 percent Motivated by community need and free of of city dwellers.14 Utility cooperatives like investor demands for immediate returns, the BARC help address inequities in areas deemed cooperative could take a longer view of its “unprofi table” by investors. broadband investment. While investor-owned utility services aim to recoup investments Lack of access to broadband aff ected overall in three to four years, member-owned business sustainability in BARC’s service cooperatives can fi nance capital costs over ten area and hampered educational achievement years or more. for area youth. As a utility, BARC knew their business could only grow at the rate The community benefi ts of BARC’s decision of business and household formation, so if to provide broadband services extend far these declined, so would the co-op. While beyond the ability to stream Netfl ix. Broadband the challenges of fi nancing, building and access boosted Rockridge County Elementary maintaining a whole new communications School’s internet speed from 3 megabytes to system was daunting for the small co-op, 250 overnight at a fraction of the previous cost. BARC leaders also realized their future Local businesses now have internet access to depended on it. As Keyser put it, “It became meet their business needs. apparent that this one is on us, no one else As the BARC example shows, utility is going to do it.” Not only that, but “it was cooperatives are vital to the long-term our heritage, it is our mission” to serve the economic health of rural communities. Their community in this way. unique ability to succeed without an excessive drive for profi ts allows for a more community- based model of service, ensuring that when the 14 Tucker, Russell, Joe Goodenbery and Katherine Loving. “The Digital Divide,” Cooperative Business Journal, Fall 2018, p.20. cooperative succeeds, everyone else does too.

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